In a significant move to combat cybercrime and enhance global security efforts, the IRS Criminal Investigation (CI) has joined forces with international counterparts to provide advanced training to Ukrainian law enforcement officers. The focus of this training is on the complexities of cryptocurrency and blockchain tracing.

Strengthening the Fight Against Crypto-Enabled Crime

Building on the success of previous cyber training sessions provided to Ukrainian law enforcement in May, the IRS Criminal Investigation (CI) collaborated with the Dutch Fiscal Information and Investigation Service (FIOD) and His Majesty’s Revenue and Customs (HMRC) from the UK. Together, they conducted a second training session from September 18th to 21st, with the goal of helping nearly 40 Ukrainian law enforcement officers gain a deeper understanding of cryptocurrency and blockchain tracing.

This training was conducted online and equipped Ukrainian law enforcement with essential tools to combat money laundering, analyze fraudulent cryptocurrency transactions, and enhance their skills in blockchain forensic investigations.

Collaboration with Blockchain Analytics Firms

According to the official press release, the CI, FIOD, and HMRC partnered with blockchain analytics firms CipherTrace and BlockTrace to deliver this training. The program brought together participants from various Ukrainian law enforcement agencies, including the Cyber-Police Department of the National Police of Ukraine, the Economic Security Bureau of Ukraine, the Security Service of Ukraine, the National Anti-Corruption Bureau of Ukraine, and Ukraine’s State Bureau of Investigation.

Upon successful completion of the training and passing an examination, participants were accredited as Cryptocurrency Tracing Certified Examiners (CTCE).

Government-Private Sector Partnership

CI Chief Jim Lee emphasized the importance of public-private partnerships, highlighting how government agencies and the private sector have collaboratively addressed global issues, such as curbing sanction evasion. He stated, "I regularly tout the importance of public-private partnerships, and the trainings we’ve delivered to our Ukrainian law enforcement partners are real-life examples of how government agencies and the private sector have come together on a global level to curtail sanction evaders."

In May 2023, CI, in partnership with blockchain intelligence platform Chainalysis, provided initial cyber training to Ukrainian law enforcement. The primary objective of that training was to identify and disrupt the financial networks used by individuals attempting to conceal their assets in violation of sanctions.

Sanctions Evasion

Following the invasion of Ukraine by Russian military forces, fundraising groups linked to the Russian military have managed to raise millions of dollars in cryptocurrencies, despite US and international sanctions. While it was initially estimated that Russian military groups had amassed around $4.2 million in cryptocurrencies, recent research by blockchain analytics firm Elliptic suggests that the figure could be as high as $20 million.

Notably, more than half of these funds have been funneled through US-sanctioned entities, with over 80% of the money passing through centralized cryptocurrency exchanges. These entities have also made use of decentralized finance (DeFi) protocols, NFT services, and decentralized exchanges.

The collaboration between global agencies and the training of Ukrainian law enforcement officers is a proactive step in addressing crypto-enabled crime and enhancing international security efforts in an increasingly digital world.